The Global Chemical Industry Faces Multiple Challenges in 2026
2026-1-20
Recently, North American market analysts noted that the global chemical industry will continue to face multiple challenges in 2026 after the turbulence of 2025, with persistent supply-demand imbalances and heightened policy and geopolitical uncertainties exacerbating market volatility, leaving the sector overall in a prolonged downturn. However, despite these difficulties, global chemical production is expected to still grow, albeit at a significantly slower pace.
Recent data released by the American Chemistry Council (ACC) shows that the global chemical production growth rate will decline from 2.6% in 2025 to 1.9% in 2026, with moderate increases but varying growth rates across major regions.
From a regional market perspective, North America is expected to see a 0.5% increase in chemical production in 2026, with the U.S. slowing from 0.7% in 2025 to 0.3%. U.S. industrial production growth will similarly decline from 1.1% to 0.6%, though the chemical sector maintains some resilience, with the North American chemical market poised to recover by mid-2026. European chemical production will reverse its decline, shifting from a 1.2% contraction in 2025 to a modest 0.2% growth in 2026. However, core challenges persist in competitiveness and stringent regulatory pressures, compounded by the eurozone¡äs GDP growth slowing from 1.5% to 1.1%. High energy prices and intensified export competition create long-term headwinds, with only increased fiscal stimulus and infrastructure spending in Germany providing limited benefits. In the Asia-Pacific region, India may emerge as a bright spot. Indian GDP growth is projected to reach 6.4% in 2026, driven by simultaneous industrial and consumer demand growth. Petrochemical demand will surge strongly, prompting India¡äs chemical sector to expand specialty chemical production capacity to reduce import reliance. Africa and the Middle East will accelerate chemical production growth, rising from 2.3% in 2025 to 3.8%, making them the fastest-growing region.
In terms of market segmentation, the performance of various sub-sectors in the global chemical industry in 2026 will be moderate and differentiated, with production growth or decline not exceeding 2%. The production growth of basic chemicals in the U.S. increased from 0.1% to 1.2%, while that of specialty chemicals shifted from a 4.3% growth to a minor decline of 0.2%, primarily due to continued weakness in downstream application sectors. The downstream chemical market showed structural improvement, with 12 out of the 20 sectors tracked by ACC expected to grow and 8 segments to contract, marking an improvement from the 2025 scenario of 9 growth and 11 contraction. Notably, the AI boom drove semiconductor and electronic component markets to become key growth drivers, with production growth reaching 11.9% in 2025 and projected to increase by 6.5% in 2026, boosting demand for chemical products such as semiconductor materials and high-end cooling materials.
At the policy and risk level, while global trade policy uncertainty remains above historical averages, it has shown a downward trend in recent months. The framework trade agreement reached between the U.S. and its major trading partners pushed a rebound in global trade volume in the third quarter of 2025. However, risks persist as a deteriorating U.S. labor market and declining confidence in debt sustainability may push up long-term interest rates, and the risk of economic recession has not been fully eliminated. Besides, geopolitical uncertainties have also emerged, with U.S. control policies toward Venezuela raising market concerns.
In assessing industry cycles, S&P Global Ratings expert Thomas Waters pointed out that oversupply and weak demand have led to sluggish growth in the global chemical industry. Although it has already hit bottom, revenue is unlikely to improve significantly, and market demand may remain flat or decline in 2026. Deloitte industry leader David Yanowitz stated that chemical companies have implemented various countermeasures, but until demand recovers or capacity is cleared to restore supply-demand balance, future market trends remain uncertain and the timeline and path for the industry to return to stable growth are still unclear.
Recent data released by the American Chemistry Council (ACC) shows that the global chemical production growth rate will decline from 2.6% in 2025 to 1.9% in 2026, with moderate increases but varying growth rates across major regions.
From a regional market perspective, North America is expected to see a 0.5% increase in chemical production in 2026, with the U.S. slowing from 0.7% in 2025 to 0.3%. U.S. industrial production growth will similarly decline from 1.1% to 0.6%, though the chemical sector maintains some resilience, with the North American chemical market poised to recover by mid-2026. European chemical production will reverse its decline, shifting from a 1.2% contraction in 2025 to a modest 0.2% growth in 2026. However, core challenges persist in competitiveness and stringent regulatory pressures, compounded by the eurozone¡äs GDP growth slowing from 1.5% to 1.1%. High energy prices and intensified export competition create long-term headwinds, with only increased fiscal stimulus and infrastructure spending in Germany providing limited benefits. In the Asia-Pacific region, India may emerge as a bright spot. Indian GDP growth is projected to reach 6.4% in 2026, driven by simultaneous industrial and consumer demand growth. Petrochemical demand will surge strongly, prompting India¡äs chemical sector to expand specialty chemical production capacity to reduce import reliance. Africa and the Middle East will accelerate chemical production growth, rising from 2.3% in 2025 to 3.8%, making them the fastest-growing region.
In terms of market segmentation, the performance of various sub-sectors in the global chemical industry in 2026 will be moderate and differentiated, with production growth or decline not exceeding 2%. The production growth of basic chemicals in the U.S. increased from 0.1% to 1.2%, while that of specialty chemicals shifted from a 4.3% growth to a minor decline of 0.2%, primarily due to continued weakness in downstream application sectors. The downstream chemical market showed structural improvement, with 12 out of the 20 sectors tracked by ACC expected to grow and 8 segments to contract, marking an improvement from the 2025 scenario of 9 growth and 11 contraction. Notably, the AI boom drove semiconductor and electronic component markets to become key growth drivers, with production growth reaching 11.9% in 2025 and projected to increase by 6.5% in 2026, boosting demand for chemical products such as semiconductor materials and high-end cooling materials.
At the policy and risk level, while global trade policy uncertainty remains above historical averages, it has shown a downward trend in recent months. The framework trade agreement reached between the U.S. and its major trading partners pushed a rebound in global trade volume in the third quarter of 2025. However, risks persist as a deteriorating U.S. labor market and declining confidence in debt sustainability may push up long-term interest rates, and the risk of economic recession has not been fully eliminated. Besides, geopolitical uncertainties have also emerged, with U.S. control policies toward Venezuela raising market concerns.
In assessing industry cycles, S&P Global Ratings expert Thomas Waters pointed out that oversupply and weak demand have led to sluggish growth in the global chemical industry. Although it has already hit bottom, revenue is unlikely to improve significantly, and market demand may remain flat or decline in 2026. Deloitte industry leader David Yanowitz stated that chemical companies have implemented various countermeasures, but until demand recovers or capacity is cleared to restore supply-demand balance, future market trends remain uncertain and the timeline and path for the industry to return to stable growth are still unclear.